Recording deposits you pay to lodges and airlines
How a tour operator records deposits paid to lodges, airlines and ground handlers before a trip runs, and moves the cost into the month of travel.
By Achekam · · 5 min read · For Travel businesses in South Africa, Nigeria, Kenya
A tour operator selling a group safari for next July pays deposits long before anyone travels. The lodges want a share up front to hold the rooms in peak season. The charter airline wants a deposit to hold the seats. The ground handler wants something towards vehicles and guides. By the time the group lands, the operator may have paid out a large part of the trip's cost, months earlier.
If those deposits go straight into the income statement as costs, this year's accounts look worse than they are and next year's look better. If they are lost track of, a cancelled departure turns into an argument with a lodge about what was paid. This article sets out how to record supplier deposits in Achekam so they sit on the balance sheet until the trip runs.
Paid now, used later: why a deposit is not yet a cost
A deposit paid to a lodge for a stay next year is not a cost of this year. It is money paid in advance for a service you will receive later, an asset usually called a prepayment, until the stay happens. Investopedia's guide to prepaid expenses explains how payments made in advance for future goods or services are recorded and then expensed over time.
The cost belongs in the month the trip runs, alongside the revenue from the travellers. That way each departure shows its true margin in the month it happens, and your management accounts show what each month actually earned.
The supplier's deposit invoice as a bill, paid in part
Most suppliers invoice the full trip cost with a deposit due now and the balance due closer to travel. Record that invoice as one supplier bill, line by line with VAT, for the full amount. Pick the supplier from your one supplier list, which checks for duplicates by name or VAT number, so a lodge does not end up there twice under its trading name and its company name.
A bill without a purchase order waits for approval before it posts, and once approved it can be paid in full or in parts from a chosen bank account. Pay the deposit now as a part payment. The bill then shows the balance still owed, which is exactly what you want to see when the balance falls due.
If the supplier sends a separate invoice for the deposit and another for the balance, record each as it arrives. Either way, write the departure reference on every bill, so you can find all the supplier costs for one trip later.
Payments recorded in Achekam and made in your own banking
Paying a supplier in Achekam only records the payment. No bank payment file is produced for suppliers, so the transfer itself is made in your own banking.
Keep the two in step: make the transfer, then record the payment against the bill with the same date and amount, and send the lodge your proof of payment with the booking reference. If the deposit is paid in another currency, record the amount that actually left your account, and keep the bank's confirmation showing the rate.
Moving the cost into the month the trip runs
When an approved bill posts, the supplier invoice lands in the ledger as expense, input VAT and trade payables. For a deposit on a trip months away, that puts the cost in the wrong month.
The correction is a pair of manual journals. Add a prepayments account to your chart of accounts; accounts can be added, renamed or switched off. Then:
- At the end of the month the bill posts, move the cost of the future trip from the expense account to prepayments.
- In the month the trip runs, move it back from prepayments to the expense account.
A journal that does not balance is refused, and so is one dated in a closed month, so post the first journal before you close the month, and keep a reminder for the second. A posted journal is corrected only by a reversal, so if a trip date moves, reverse the release journal and post it in the new month. Agree the method with your accountant first; some prefer to move only the paid deposit, others the whole bill.
Once this is in place, the income statement in your management accounts, which shows a chosen period beside the period before, puts each departure's supplier costs in the same month as its revenue.
Deposits lost when a trip is cancelled
Departures get cancelled: too few bookings, a supplier failure, travel advisories, or the client pulling out. What happens to your deposits depends on each supplier's terms.
- Refunded by the supplier. Record the money when it reaches your bank, as your accountant advises, and clear the prepayment.
- Carried to a later date. Keep it in prepayments with the new departure reference.
- Forfeited. The deposit is now a real cost, a cancellation loss, and the prepayment is released to an expense account in the month of cancellation.
If the client cancelled, your booking terms decide how much of that loss you can recover from them; refunding a cancelled trip covers the client side.
A supplier-deposit schedule per departure
Keep one schedule per departure, outside the ledger or in Document Centre with the trip's documents:
| Supplier | Total cost | Deposit paid | Date paid | Balance due | Balance date | Refundable? |
|---|
At each month end, add up the deposits paid for future departures across all schedules. That total should equal the balance on your prepayments account. If it does not, a journal is missing. The schedule is also what you use to decide which balances to pay this month, and how much cash is already committed to next season.
Deposits paid in dollars bring their own questions, covered in running a US dollar account beside your local account, and the wider question of which money is yours is covered in keeping supplier money apart from your commission.
For next season's departures
Set up the prepayments account and a schedule template now, and enter every deposit already paid for future trips. Then post the first catch-up journal, so the balance sheet shows this season's deposits as the asset they are.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
